FORMER FED PRESIDENT: 'The Federal Reserve is a giant weapon that has no ammunition left'

Former Dallas Fed president Richard Fisher thinks the Federal
Reserve is out of tools to help markets.

In an
incredible interview on CNBC, Fisher said the Fed
"front-loaded" a market rally after the financial crisis with its
quantitative-easing stimulus program, but he warned that the
fallout was coming — and that the Fed didn't have anything left
to help markets.

The Federal Reserve is a giant weapon that
has no ammunition left. What I do worry about is: It was
the Fed, the Fed, the Fed, the Fed for half of my tenure there,
which is a decade. Everybody was looking for the Fed to
float all boats. In my opinion, they got lazy.Now we go back to fundamental analysis, the kind of work
that used to be done, analyzing whether or not a company truly on
its own, going to grow its bottom line and be priced accordingly,
not expect the Fed tide to lift all boats. When the tide recedes
we're going to see who's wearing a bathing suit and who's not. We
are beginning to see that.

In short, Fisher is allowing that the major critique of the Fed
over the past several years — that it inappropriately distorted
markets — is right.

CNBC's Simon Hobbs then asked Fisher whether he would sort of
"apologize" to markets for having sent stocks too far too fast.

Fisher wouldn't quite go that far, saying the Fed was backed into
a corner given the fallout from the financial crisis.

But it was the final round of quantitative easing — which was
launched in September 2012 and was by far the Fed's most
controversial postcrisis move — that was not supported by Fisher.
And it is this final push from the Fed that he believes created
conditions markets will now pay for.

And while you'd expect a Fed official to speak more freely after
stepping down (Fisher retired last year after taking the top spot
at the Dallas Fed in 2005), Fisher's commentary would seem to
open up him and his colleagues up to even harsher criticism than
what they typically face.